New EU Carbon Measures Could Hinder Chinese Battery-Makers’ Expansion
A provisional EU policy to make batteries more sustainable and a proposed carbon tax might present fresh obstacles for Chinese companies in one of their largest overseas markets, experts say
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Newly proposed EU carbon measures could end up being a major obstacle for Chinese battery-makers as they ramp up their expansion in Europe, now one of their largest overseas markets, industry executives and experts said.
In December, the EU agreed on a provisional policy to make batteries more sustainable throughout their entire lifecycle — from the sourcing of raw materials to end-of-life recycling. Under the policy, manufacturers will be barred from the European market unless they come up with plans to prove that they can meet a series of sustainability targets, including carbon footprint thresholds.
That same month, the EU proposed adopting a carbon tax law and imposing tariffs on imports of carbon-intensive goods from countries with less stringent greenhouse gas emissions regulations. The law would cover imports from industries including iron and steel, cement, aluminum and fertilizers, but it is widely expected to eventually also cover lithium batteries.
Complying with the two laws could mean additional costs for companies in the short term, according to Zhao Weijun, an executive director at Chinese renewable-battery maker Envision AESC. Zhao oversees the company’s China operations.
Over the longer term, companies could lose access to the European market if they failed to meet the targets laid out in the law, Zhao said at an industry forum in Shanghai over the weekend.
At the same event, Wu Kai, chief scientist at Chinese battery giant Contemporary Amperex Technology Co. Ltd. (CATL) (300750.SZ -3.04%) echoed Zhao’s concerns. He urged the Chinese government to be proactive and enhance communication with other countries’ regulators to provide “clear guidance” to the industry.
Better communication would help get EU and Chinese battery industry standards in line, which would benefit Chinese companies.
Part of the problem now is that the term “green energy” means different things in China and other jurisdictions, Wu said. In China, for example, hydropower counts as green, but it might not in Europe.
Chinese battery-makers including CATL, CALB Co. Ltd. and SVOLT Energy Technology Co. Ltd. have all recently ramped up their overseas expansions with Europe as one of their top destinations.
During this year’s first quarter, China’s exports of lithium-ion batteries surged 80% to $16 billion, according to data released last week by the General Administration of Customs (GAC). The EU, the U.S. and the Association of Southeast Asian Nations are currently the three largest export markets for renewable products shipped from China, including lithium batteries, according to a GAC spokesperson.
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